Sensex up 290 points from the day's low

Key benchmark indices logged decent gains after seeing choppy swings throughout the day. Firm global markets and speculative build up of positions in the run up to the Union Budget 2009-10, supported the domestic bourses. The BSE 30-share Sensex gained 151.63 points or 1.05%, off 82.02 points from the day's high but up 289.95 points from the day's low. Realty shares were the star performers of the day

After opening slightly higher key benchmark indices slipped into the negative zone only to rebound later in early volatile trade. But a sell-off gripped the market soon on concerns that a glut in share sales by corporate India will suck liquidity from the secondary market. The market cut losses later as an index showing expansion in the manufacturing activity in June 2009 offset dismal exports for May 2009.

Firm opening of European stocks and higher US index futures boosted Indian stocks in early afternoon trade. The market came sharply off the higher level only to bounce back later. Volatility was immense in the last one hour of trade.

Following withdrawal of an institutional placement by GMR Infrastructure on Tuesday, 30 June 2009, realty firm Unitech said on Wednesday, 1 July 2009, it would raise Rs 2789 crore ($580 million) by issuing shares to qualified institutional buyers.

Corporate India appears to be a hurry to raise funds. A number of firms have announced plans this week to raise funds through shares sales to institutional investors, taking advantage of a solid surge in share prices in the past three months. Brokers expect companies to raise over $10 billion in the current financial year by way of share placements and initial public offers.

Raising of funds will help corporates finance expansion and reduce debt. On the flip side, it will result in equity dilution which the stock market normally does not like due to earnings dilutions. Realty firm Housing Development & Infrastructure (HDIL) has reportedly raised $350.30 million by QIP issue on the same day.

Institutional investors also bought $150 million of shares from sugar maker Bajaj Hindusthan this week, as well as $110 million from realty firm Sobha Developers and $100 million from construction firm Hindustan Construction Company.

Meanwhile, the Indian government on Tuesday, 30 June 2009 eased overseas borrowing rules for developers of tax-free special economic zones, township projects and non-banking finance firms engaged in funding infrastructure projects.

The latest macro data confirmed that the economy is recovering. The Markit Purchasing Managers' Index (PMI) based on a survey of 500 companies, fell slightly to 55.34 in June 2009 from 55.7 in May 2009, which was the highest in eight months, data released a little while ago showed. Still, it is above the threshold of 50 that separates expansion from contraction. It hit a trough of 44.4 in December 2008 and has steadily risen since then. The new orders index fell to 58.6 in June 2009 from 59.1 in May 2009.

On the flip side, India's exports fell for the eighth month in a row in May 2009, this time by 29.2%, due to global downturn, while imports dropped by 39.2%, reflecting slowdown in domestic consumption. Exports dropped to $11.01 billion in May 2009 from $15.55 billion in the same month last year, according to the government data released today, 1 July 2009. Imports dipped to $16.21 billion in May 2009 from $26.68 billion over the year-ago period. The trade deficit during April-May 2009-10 was $10.20 billion against $19.88 billion.

The near-term major trigger for the stock market is the Union Budget 2009-10 on 6 July 2009. The Annual economic survey is scheduled to be presented on 2 July 2009 followed by the Rail Budget on 3 July 2009.

The broad expectations from the budget are thrust on infrastructure, including easier financing of long-gestation infrastructure projects, a plan for disinvestment, some reforms such as hiking foreign direct investment limit for insurance and a clear road map to rein in the high fiscal deficit in the future. Consumption is likely to be shored up through the various rural spending programmes. At the same time, the government may rollback tax sops given to sectors doing well such as services.

The corporate sector is expecting a removal of the fringe benefit tax (FBT). Under the current dispensation, an employer has to pay FBT at 30% on the fringe benefit, the taxable value of which is determined in accordance with a formula. FBT is a tax levied on perquisites-or fringe benefits -provided by an employer to his employees.

Domestic brokerages and fund houses want the government to remove securities transaction tax (STT) on trading in securities in the Budget. The Securities & Exchange Board of India (Sebi) members have already forwarded the demand of premier stock exchanges, BSE and NSE, to Finance Minister Pranab Mukherjee for scrapping STT in the Budget.

STT, which was introduced in the Union Budget 2004-05 by the then Finance Minister P Chidambaram, taxes every purchase and sale of securities entered into in a recognised stock exchange in India in securities like shares, debentures, bonds, and units of mutual funds. Equity investors pay an STT of 0.125% for every transaction in cash for the delivery of shares.

Meanwhile, before the budget, investors will also be keenly watching the outcome of the Employees' Provident Fund Organisation (EPFO's) apex advisory body meet on 4 July 2009. The Central Board of Trustees (CBT) will take a view on the Finance Ministry's proposal to invest 15% of its corpus in equity. The EPFO has a corpus of about Rs 1,82,000 crore and the permission to invest 15% funds in equity could have positive implications for the capital market. A proposal to park funds in the stock market was earlier rejected by the EPFO's Finance and Investment Committee (FIC) at its meeting on 26 March 2009.

European markets were trading firm today, 1 July 2009, with oil, banks, and telecom shares leading the rally. Key benchmark indices in UK, Germany and France were up by between 1.35% and 1.77%.

Asian markets were mostly in the green. Key benchmark indices in South Korea, China, Singapore, and Taiwan were up by between 0.83% and 2.28%. However, key indices in Hong Kong and Japan fell 0.81% and 0.19% respectively

China's manufacturing growth accelerated in June 2009, adding to a picture of an improving economy as the effects of stimulus spending and new bank lending fueled activity. Brokerage CLSA's PMI rose to 51.8 in June 2009 from 51.2 in May 2009, the highest level since July 2008. The CLSA figures suggest China's manufacturing sector has expanded for three straight months.

A reading above 50 in either index indicates conditions are in an expansionary mode, while anything below 50 signals contraction.

Trading in the US index futures indicated the Dow could rise 44 points at the opening bell today, 1 July 2009. Earlier, the US index futures data showed the Dow could open slightly lower.

US markets declined on Tuesday, 30 June 2009, after consumer confidence unexpectedly slid and delinquencies on the least-risky mortgages more than doubled. The Dow Jones industrial average slipped 82.38 points, or 0.97%, to 8,447, the S&P 500 fell 7.91 points, or 0.85%, to 919.32, and the Nasdaq Composite index declined 9.02 points, or 0.49%, to 1,835.04.

The June 2009 US job data would be closely watched. The data will be unveiled on Thursday, 2 July 2009 instead of the usual Friday, 3 July 2009 as the US markets will be closed on Friday, 3 July 2009, for independence day holiday. The Job data could have a huge impact on US and global stock markets as positive data would confirm an improvement in the US economy. US non-farm payrolls are forecast to lose 355,000 jobs in June 2009 versus May's 2009 slide of 345,000. The US unemployment rate is projected to jump to 9.6% in June 2009 from 9.4% in May 2009.

The BSE 30-share Sensex gained 151.63 points or 1.05% to 14,645.47. The Sensex opened 12.59 points higher at 14,506.43. At the day's high of 14,727.49, the Sensex rose 233.65 points in mid-afternoon trade. The Sensex lost 138.32 points at the day's high low of 14,355.52 in early afternoon trade

The S&P CNX Nifty was up 49.80 points or 1.16% to 4,340.90 Nifty July 2009 futures were at 4339.40, at a discount of 1.50 points as compared to the spot closing. Turnover in NSE's futures & options (F&O) segment rose to Rs 55,613.06 crore from Rs 52,352.52 crore on Tuesday, 30 June 2009.

The stock market has risen sharply in the past four months or so, on heavy buying by foreign funds. The BSE Sensex is up 4998.16 points or 51.80% in calendar year 2009 as on 1 July 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex has risen 6485.07 points or 79.47% as on 1 July 2009

A strong global liquidity and increase in risk appetite boosted inflows after a comfortable victory for the Congress-led UPA government in parliamentary elections raised expectations of economic reforms. Foreign institutional investors (FIIs) bought shares worth a net Rs 3,224.90 crore in the month of June 2009 while their inflow in calendar year 2009 totaled Rs 24,544.30 crore (till 30 June 2009).

Coming back to today's trade, the market breadth, indicating the overall health of the market, turned negative after a positive start. On BSE, 1341 shares declined as compared with 1292 that advanced. 73 shares remained unchanged.

The BSE clocked a turnover of Rs 5753 crore as compared with Rs 6,784.02 crore on Tuesday, 30 June 2009.

The BSE Mid-Cap index rose 1.01% to 5,127.51 and the BSE Small-Cap index gained 0.30% to 5,757.42. But both these indices underperformed the Sensex

All sectoral indices on BSE logged gains with the BSE Consumer Durables index being the only exception.

The BSE Bankex (up 1.33%), the BSE Realty index (up 4.25%), the BSE Oil & Gas index (up 1.12%), the BSE TECk index (up 1.56%), the BSE Auto index (up 1.26%), outperformed the Sensex

The BSE Metal index (up 0.53%), the BSE Healthcare index (up 0.24%), BSE Power index (up 0.98%), BSE Capital Goods index (up 0.81%), BSE PSU index (up 0.98%), BSE Consumer Durables index (down 0.15%), BSE IT index (up 0.92%), the BSE FMCG index (up 0.87%), underoperformed the Sensex.

Among the 30-member Sensex pack, 26 advanced while only 4 of them slipped

Rate sensitive realty stocks rose after reports Housing Development & Infrastructure (HDIL) and Sobha Developers successfully raised funds through share sales to foreign institutions. HDIL rose 1.22% to Rs 235.55, rebounding from day's low of Rs 224.10. Sobha Developers advanced 3.73% to Rs 217. Unitech, India's second largest real estate developer by sales, rose 4.40% to Rs 83.10

India's largest real estate developer by sales DLF jumped 5.05% to Rs 326.50 sand was the top gainer from the Sensex pack.

But infrastructure firm GMR Infrastructure lost 1.16% after it was on Tuesday, 30 June 2009 forced to abandon its attempt to raise $500 million in off-market share sales to institutional investors after they showed little interest in the offering.

India's largest engineering and construction company by revenue Larsen & Toubro rose 0.43% after the company bagged two orders aggregating Rs 651 crore in the hydrocarbon sector.

Nagarjuna Construction Company rose 2.08% after the company bagged fresh orders aggregating Rs 797 crore. The company announced the new order win during trading hours today, 1 July 2009.

India's largest private sector firm by market capitalisation Reliance Industries (RIL) advanced 1.37% to Rs 2051, as it may move the Supreme Court against a recent unfavourable high court order on gas sales. RIL said on Tuesday, 30 June 2009, it could not sign a gas supply agreement with Reliance Natural Resources (RNRL) as there was no clarity on government approval for the terms. RIL said it wanted the terms such as price, quantity and tenure to be subject to government approval. However RNRL lost 1.01%

The Bombay High Court, in its order dated 15 June 2009, had directed that Anil Ambani's RNRL will get assured gas supply of 28 million metric standard cubic metre per day (mmscmd) of gas from RIL's Krishna-Godavari basin for 17 years at $2.34 million per metric British thermal unit (mmbtu). This is 44.28% less than the price fixed by the government for gas sale from the RIL block in the KG basin at $4.2 million per metric British thermal unit.

PSU OMCs rose on recent reports a road map for a partial decontrol of petrol and diesel prices may be announced in the Union Budget 2009-10. BPCL (up 5.79%), HPCL (up 3.59%), and IOCL (up 2.06%), gained.

The government is likely to allow state-run oil marketing companies (Oil PSUs) to fix retail prices of at least auto fuels viz. petrol and diesel in a phased decontrol programme. As a result, oil companies may have the freedom to price auto fuels within a certain band. But if crude oil moves up beyond a level (recommended level of $75 a barrel) the government would step in with controlled prices at the pump level to protect consumers from the impact of high global prices.

Gujarat State Petronet rose 6.01% after net profit rose 23.5% to Rs 123.41 crore on 16.7% rise in net sales to Rs 487.50 crore in the year ended March 2009 over the year ended March 2008. The company announced the results after market hours on Tuesday, 30 June 2009.

Auto stocks were in demand as the government may provide a thrust to the rural sector in the budget. Car and two-wheeler makers derive substantial sales from rural markets.

India's top small car maker by sales Maruti Suzuki India rose 0.33% after total vehicle sales rose 22.63% to Rs 75,109 units in June 2009 over June 2008. Maruti's domestic sales rose 9.5% to Rs 61,773 units, while exports soared 175.8% to Rs 13,336 units in June 2009 over June 2008. The announcement came during market hours today, 1 July 2009.

India's largest tractor maker by sales Mahindra & Mahindra gained 3.10% after 2.55 lakh shares were traded on the counter in a bulk deal at Rs 712 per share on the National Stock Exchange

India's largest commercial vehicle maker by sales Tata Motors gained 3.66%, reversing two-day slide of over 15% triggered by weak financial performance, The company reported a net loss of Rs 2505.25 crore in the year ended March 2009 as compared with net profit of Rs 2167.70 crore in the year ended March 2008. The results were announced after market hours on 26 June 2009.

TVS Motor Company rose 2% after sales increased 6% at 115,488 units in June 2009 over June 2008.

But India's largest bike maker by sales Hero Honda Motors slipped 0.13% despite a 23.7% surge in sales to 3,65,734 units in June 2009 over June 2008

India's top cellular services provider by sales Bharti Airtel advanced 2.14%. As per recent reports, JP Morgan, BNP Paribas, HSBC and Barclays are in talks with Bharti Airtel to fund part of the $4 billion needed by Bharti Airtel to complete its $23-billion merger with MTN, Africa's largest mobile phone operator. The merger deal will see both Bharti and MTN offering equity stakes and cash to each other. Bharti will have to make a net cash payment of around $4 billion to complete the deal, which will see it acquiring a 49% stake in MTN, which, in turn, will get a 36% economic interest in the Indian firm. Both companies are in exclusive talks till 31 July 2009.

Banking stocks rose on hopes they may get tax relief on interest earned on infrastructure lending and on other favorable announcements in the Union Budget 2009-2010.

India's biggest bank in terms of branch network State Bank of India (SBI) reversed early losses to settle with gain of 1.72%. The bank on Tuesday, 30 June 2009 introduced a new home loan scheme under which it offer loans up to Rs 30 lakh at fixed rates of 8% for the first year and 9% for the next two years. The bank's earlier offer of home loans at a fixed rate of 8% for the first year ended on Tuesday, 30 June 2009.

Under the new scheme, customers will have two options in the fourth year: a floating rate at 2% below State Bank Advance Rate (SBAR), which is currently at 11.75%, or a fixed rate of 1% below SBAR with a five year re-set. A re-set means new rates will come into effect at the end of the specified period.

India's second largest private sector bank by net profit HDFC Bank gained 0.29% and India's largest private sector bank by net profit ICICI Bank rose 0.68%.

Outsourcing focussed IT stocks gained on reports the government is likely to extend the tax benefits on exports in the Budget. The scheme expired in March 2009.

India's second largest software firm by sales Infosys Technologies rose 1.02% despite a 1.24% fall in its ADR on Tuesday, 30 June 2009.

India's largest software services exporter by sales TCS rose 0.72%. India's third largest software services exporter by sales Wipro gained 0.48%.

As per reports TCS, Wipro and Infosys, apart from SAP and IFS Defense, are pursuing contracts worth Rs 2,000 crore from the country's defense forces, the Indian Air Force (IAF) and the Army, who are seeking to modernise their processes and become more efficient organisations.

Glodyne Technoserve was locked at 5% upper limit after the company's board of directors recommended a liberal 1:1 bonus issue. The company made this announcement before trading hours today, 1 July 2009.

India's largest private sector aluminium maker by sales Hindalco tumbled 2.26% to Rs 84.50, extending yesterday's 1.59% fall, after consolidated net profit declined 77.88% to Rs 485 crore in year ended March 2009 over year ended March 2008. Net sales rose 9.35% to Rs 65625 crore in year ended March 2009 over year ended March 2008. The results were announced during market hours on Tuesday, 30 June 2009. It was the top loser from the Sensex pack Nevertheless, the stock recovered from day's low of Rs 80.25

Meanwhile, the company's board of directors in its meet held on 30 June 2009 approved raising funds upto $500 million by selling shares to institutional investors.

However other metal stocks gained on firm domestic demand. Sterlite Industries (up 0.86%), JSW Steel (up 1.44%), Tata Steel (up 1.31%), Sesa Goa (up 1.97%), gained.

FCCG stocks gained after the firms said sales and consumption have not declined due to the delay in the onset of monsoons. Hindustan Unilever (up 2.40%), ITC (up 0.95%), Marico (up 1.30%), Colgate Palmolive India (up 2.51%), and Bata India (up 4.25%), gained.

Fortunes of fast-moving consumer goods (FMCG) firms are closely linked to the monsoon as they derive substantial of sales from rural markets.

Mundra Port & Special Economic Zone, a developer of special economic zone rose 0.79% after the government on Tuesday, 30 June 2009 eased overseas borrowing rules for developers of tax-free special economic zones.

But infrastructure sector financiers declined despite easier overseas borrowing norms for non-banking finance firms engaged in funding infrastructure projects. IDFC lost 1.07% and SREI Infrastructure shed 5.48%.

Shipping stocks gained on reports the Shipping Ministry will award 6 port projects worth Rs 3319 crore under the ministry's 100-day agenda. Varun Shipping (up 1.42%), GE Shipping (up 2.83%), Mercator Lines (up 2.87%), Garware Shipping (up 1.89%), and Essar Shipping (up 1.68%), rose.

Shipping Corporation of India jumped 7.95% on reports the Shipping Minister is examining divestment in the company.

Shares of firms which rely on orders from Indian railways rose on expectation of some positive announcement in the forthcoming Railway Budget on 3 July 2009. Kernex Microsystems (up 5%), Texmaco (up 2.11%), Titagarh Wagons (up 1.56%), Kalindee Rail Nirman Engineers (up 1.63%), Beml (up 3.63%), spurted.

Educomp Solutions was the top traded counter on the BSE with turnover of Rs 427.45 was followed by Reliance Capital (Rs 262.63 crore), Reliance Industries (Rs 234.12 crore), Suzlon Energy (Rs 196.87 crore), and HDIL (Rs 189.22 crore).

Unitech was the volume topper on BSE clocking volume of 2.05 crore shares followed by Ispat Industies (1.89 crore shares), Suzlon Energy (1.86 crore shares), NIIT (1.70 crore shares), and Reliance Natural Resources (1.54 crore shares)

Shares of companies providing services to the education sector gained on speculative buying ahead of the Union Budget 2009-10 on 6 July 2009 on speculation the government's major thrust will be on this sector. Educomp Solutions (up 15.62%), Everonn Systems (up 11.45%), NIIT (up 15.62%), Navneet Publications (up 9.03%), Jetking Infotrain (up 17.81%), surged.

United Spirits rose 0.34% on reports private equity majors like KKR, Blackstone and Capital International are in race to acquire stake in the company. The private equity investors are reported to be looking to buy stake worth $250-300 million in United Spirits. According to the report, the three PE investors have given term sheets to the company.

EIH declined 1.59% after consolidated net profit fell 23.27% to Rs 169.95 crore in the year ended March 2009 over the year ended March 2008. The company announced its results after market hours on Tuesday, 30 June 2009.

Cipla declined 2.68% after a block deal of 5.03 lakh shares was executed on NSE at Rs 244 per share. The block deal constituted 0.06% of the company's equity.

Areva T&D India rose 7.90% after the company's France-based parent Areva said its board approved sale of its global power transmission and distribution unit in a bid to raise cash to shore up its balance sheet and fund future investments.